How is a top marginal rate of 69% revenue maximizing?

[Anarchist420]

I don't get it since raising the top marginal rate from 35% to 39.6% doesn't even bring in more than $70Bn extra this year.

IIRC, Murray Rothbard actually disagreed with Art Laffer on this (but I don't).

Anyway, I also don't get how anyone could actually know what the revenue maximizing rate is.

 

[Incorruptible]

A top rate of 69% isn't maximizing. When taxes are raised too high the rich will rightly use the law and other measures to pay lower taxes.

And your right about raising the rate from 35-39.6%, raising taxes won't raise enough revenue since the real problem is too much spending.

 

[Fern]

-snip-
Anyway, I also don't get how anyone could actually know what the revenue maximizing rate is.

No one knows what the top revenue maximizing rate is. If the top rate is too low, the govt is 'leaving some money on the table'. If the top is too high people will be motivated to use both legal and illegal means to avoid/evade taxes resulting in less revenue for the govt.

Economists have done a ton of studies in an attempt to determine the top rate. They don't agree with each other. Some have determined a rather low top rate, others a high top rate. I don't have time to search for you now, but if you google the topic you'll find info on the range in rates that economists have come up with; e.g., 35% to 65% (That's not the range in economists' estimates, I'm using that range of rates as an example.)

Fern

 

[Engineer]

No one knows what the top revenue maximizing rate is. If the top rate is too low, the govt is 'leaving some money on the table'. If the top is too high people will be motivated to use both legal and illegal means to avoid/evade taxes resulting in less revenue for the govt.

Fern

It doesn't matter what the top rate is, people with larger sums of money are going to be motivated to use both legal and illegal means to avoid/evade taxes, period. Greed has no upper or lower limits, as has been shown by the undermining of the middle class over the last few decades all in order to make a few more bucks for those at the top (without care for the long term future).

 

[Abwx]

IIRC, Murray Rothbard actually disagreed with Art Laffer on this (but I don't).

The debate is about 1000 years old , Laffer did aknowledge
that he merely used prior work dating back from Ibn Khaldoun.

The basic concept was not new; Laffer himself notes antecedents in the writings of Ibn Khaldun

Whatever , never in human history have the whealthiest people
enjoyed a wealth increase as big as between 1980 and today.

This trace its origin right in the neo conservative counter revolution
that started with Reagan in the US and the simultaneous take over
of europe by regressive political parties.

 

[Fenixgoon]

It doesn't matter what the top rate is, people with larger sums of money are going to be motivated to use both legal and illegal means to avoid/evade taxes, period. Greed has no upper or lower limits, as has been shown by the undermining of the middle class over the last few decades all in order to make a few more bucks for those at the top (without care for the long term future).

this.

when you can hire an army of lawyers, you'll use every loophole you can to maximize your profit/income. simple as that.

doesn't matter how many "loopholes" there are - if any exist, they will be exploited to maximum effect.

 

[Exterous]

It doesn't matter what the top rate is, people with larger sums of money are going to be motivated to use both legal and illegal means to avoid/evade taxes, period. Greed has no upper or lower limits, as has been shown by the undermining of the middle class over the last few decades all in order to make a few more bucks for those at the top (without care for the long term future).

There are degrees - the higher the tax rate the more the risk\reward favors lowering your reported income and the more attractive shady dealings become. Also of debate: Is there a tipping point where people decline to work\produce more for more income at a higher tax rate or is it an steady decline?

 

[piasabird]

You can own up to a $999k house and still get the Interest and tax deductions on your federal taxes. Tell me that does not favor the rich. Plus if you are ultra rich just make your money in stocks or dividends. Better yet move to a state that has no income tax.

 

[halik]

That rate (39.x) was in place in late 90s and you have data for what the actual effective tax rate ended up being after all the deductions etc at that time. Use the current AGI for the filers in that tax bracket and the observed effective tax rate and you'll get the ~ additional revenue the tax hike will bring in.

No idea where you're pulling 69% from...